What qualifies an enrolled agent
WHAT IS AN ENROLLED AGENT?
Enrolled agents are America’s tax experts. They are the only federally-licensed tax practitioners who both specialize in taxation and have unlimited rights to represent taxpayers before the Internal Revenue Service. These tax specialists have earned the privilege of representing taxpayers before the IRS by either passing a comprehensive three-part examination covering individual tax returns; business tax returns; and, representation, practice, and procedure, or through relevant experience as a former IRS employee. All candidates are subjected to a rigorous background check conducted by the IRS.
WHAT ARE THE DIFFERENCES BETWEEN ENROLLED AGENTS AND OTHER TAX PROFESSIONALS??
The enrolled agent license is the most expansive license the IRS grants a tax professional. Enrolled agents are generally unrestricted as to which taxpayers they can represent, what types of tax matters they can handle, and the IRS offices before which they may practice. Unlike attorneys and CPAs, who may or may not choose to specialize in taxes, all enrolled agents specialize in taxation. CPAs and attorneys are licensed by the states, but enrolled agents are federally licensed. While the IRS requires all preparers to obtain and maintain a valid Preparer Tax Identification Number (PTIN), Enrolled agents have gone beyond the basic requirements and have demonstrated their expertise through testing.
WHAT IS REPRESENTATION?
Taxpayers who find themselves in tax trouble are allowed to represent themselves before the various administrative levels of the IRS. However, most taxpayers facing an IRS collection action, an IRS audit of any sort (whether the IRS asks for mounds of documents by mail or requests an in-person examination), or an appeal of any collection or examination action would be wise to send a qualified tax expert in his or her place. Taxpayers who are represented have a guide who can lead them through the process, someone authorized to speak on their behalf (and in their place) and fight for the best possible outcome. Enrolled agents are authorized by the IRS to represent taxpayers before the IRS; every enrolled agent has passed testing on representation.
THE ENROLLED AGENT LICENSE IS THE HIGHEST CREDENTIAL THE IRS ISSUES.
The advantage of working with an enrolled agent lies not only in the depth of his or her experience and understanding of how to prepare a tax return but in his or her knowledge of tax law that may be used to represent taxpayers before the IRS. If you get a letter from the IRS, or worse, are audited or are the target of a collection action, your EA can speak directly to the IRS on your behalf.
WHY SHOULD I CHOOSE AN ENROLLED AGENT WHO IS A MEMBER OF THE NATIONAL ASSOCIATION OF ENROLLED AGENTS (NAEA)?
The IRS recommends using a tax preparer that is a member of a professional organization that offers continuing education and other resources and holds members to a code of ethics. NAEA goes beyond the IRS’ recommendations by requiring members to fulfill continuing education requirements that exceed the IRS’ required minimum. In addition, NAEA members must adhere to a stringent Code of Ethics and Rules of Professional Conduct. Members of NAEA belong to a strong network of experienced, well-trained tax professionals who effectively represent their clients and work to make the tax code fair and reasonably enforced.
HOW CAN AN ENROLLED AGENT HELP ME?
Enrolled agents advise, represent and prepare the tax returns of individuals, partnerships, corporations, estates, trusts, and any other entity with tax reporting requirements. EAs prepare millions of tax returns each year and their expertise in the continually changing field of taxation enables them to effectively represent taxpayers audited by the IRS. In addition to tax preparation and tax representation, many enrolled agents offer other businesses–related services, which may include:
Bookkeeping
Financial planning or budgeting
Payroll services
Financial statement preparation
Mortgage assistance
Because enrolled agents have such diverse backgrounds and may offer a variety of services, it is important to talk with your enrolled agent about how best to put his or her expertise to work for you.
ARE ENROLLED AGENTS REQUIRED TO TAKE CONTINUING PROFESSIONAL EDUCATION?
In addition to the stringent testing and application process, the IRS requires enrolled agents to complete 72 hours of continuing education every three years to maintain their licenses. NAEA raises the bar even further – its members are required to complete at least 90 hours in a three-year period.
WHAT ARE THE KEY POINTS TO REMEMBER WHEN HIRING A TAX PROFESSIONAL?
Your tax needs are best served by an enrolled agent. However, no matter who you hire there are certain things to keep in mind.
Always use a qualified professional to repair your return.
Preparers should always sign the returns and include their Preparer Tax Identification Numbers (PTIN).
Beware of preparers who encourage you to lie or otherwise modify your information in order to get a bigger refund.
The taxpayers are responsible for what’s on a tax return. Reputable preparers will ask to see receipts and will ask multiple questions to determine whether expenses, deductions, and other items qualify. By doing so, they are trying to help their clients avoid penalties, interest, or additional taxes that could result from an IRS examination.